How a Netflix-like service from Verizon and Redbox might work

With cable subscriptions beginning to decline, everyone wants in on streaming. Though it’s late to the game, Verizon is teaming with Redbox (owned by Coinstar) to create a Netflix hybrid service that would offer Redbox DVDs and streaming movies over a Verizon video subscription service. The new service should launch (or be unveiled) later this year (second half of 2012).

According to Verizon, the new service will give users “the new and popular entertainment they want, whenever they choose, using the media and devices they prefer.” We assume this means that it will be available across a myriad of different devices, much like Netflix.

“The joint venture will combine the accessibility and value of Redbox with Verizon’s vision for a borderless lifestyle – where consumers easily accomplish what they want or need to do, on their terms, through the power of the network,” says Bob Mudge, president of Verizon consumer and mass business markets. “Together, we are erasing old technology boundaries, freeing people to spontaneously enjoy the entertainment they want, whenever they choose, using the devices and media they prefer, at home or away.”

No pricing has been announced, though we suspect it will be competitive with Netflix, with the streaming service running around $8 per month with a possible price hike for those who want Redbox DVDs, bringing the total to somewhere between $10 and $20 per month.

How will Redbox be integrated?

So how will Verizon combine its services with Redbox? We’ve listed a few possibilities below.

Discounts: It could offer a discount on Redbox rentals for those with a streaming subscription. This seems difficult as it would probably require that every Redbox vending machine (they are in most Walmarts and other large stores) be retrofitted with a way to recognize that you’re a streaming customer.

Free rentals: It could offer a certain number of free rentals (or unlimited free rentals) for those who subscribe. (Again, this would probably require kiosks being changed or updated.)

Redbox DVD-by-mail: The two companies may work together to completely mimic Netflix’s DVD mailing service, only using Redbox’s experience in procuring and shipping DVDs and Blu-rays and skipping the kiosks. This, however, seems somewhat unlikely.

How will the Verizon streaming service work?

Assuming Verizon has a plan for how to integrate Redbox, we also wonder how its streaming service will work. Here are a few of Verizon’s nuanced options, as in practice by it’s future competition.

Netflix: Will it mimic Netflix completely? This means that it will only offer older content and allow users to watch any video available on the service on any device as many times as they wish per month.

Amazon Instant Video: It could also head the Amazon Instant Video route and offer a library of free titles (like Netflix), but also offer new releases and premium films and TV shows (new episodes, popular videos) for rental or purchase. This would give the streaming service a lot more flexibility, but it could also hurt Redbox. After all, why go to a Redbox kiosk if you can simply rent the video on your TV? At the very least, the Redbox rentals will likely be $2-$3 cheaper than any rentals on the new service, we guess.

Hulu Plus: Finally, Verizon could pull a Hulu and sell ads inside its content and/or attempt to obtain next day or next week online airings of new television or movies. We don’t find this scenario very likely at all, but we’d love it if another service tried to offer new TV like Hulu does. Stranger things have happened.

Don’t be like Dish Network or HBO

There are a lot of ways Redbox and Verizon might approach this new streaming deal, but hopefully the two companies have a forward thinking attitude and aren’t simply trying to protect their current interests: namely, cable TV and DVD rentals. Dish Network made that mistake when it bought Blockbuster Video last year. Instead of turning Blockbuster into a true Netflix competitor, which it could have been, the satellite TV service is only allowing Dish subscribers to access Blockbuster DVDs-by-mail and new streaming service. As a result, Blockbuster stores continue to close around the country and the service and brand is dying entirely.

Dish could have offered its users free Blockbuster access while also making it a subscription service for everyone else. Instead, it chose to exclusively protect its subscription satellite service. HBO is in a similar boat, afraid to allow anyone without a cable TV subscription to use HBO Go, despite the demand for such a service.

We would love to see a great Netflix or Hulu competitor pop up. Hopefully Verizon and Redbox are ready to put users first. We’ll find out later this year when the two companies unveil the new service.